May 11, 2008

Just back from the Urban Land Institute’s spring meeting in Charleston SC. Our group, a sub part of the over 30,000 ULI members, is the Recreational Development Council comprised of about 220 members. Rarefied Atmosphere. I was there with Rich Feldheim and Ash Offermann.

Not a lot working for most developers, so the creative juices were flowing on how to get around the ‘emotional recession’ so named by Jim Taylor of the Harrison Group. As the country is not in a recession by the Government’s standards, not withstanding the incessant media harping that we are in one…the income demographic for vacation home properties is solidly on the sidelines.

This was an observation: this so-called recession is the first in memory not to have high interest rates. A way to create urgency for sales had been to buy-down the interest rate, but that’s a non-starter this time around. So, where is the urgency now with the buyers on the sidelines?

Here are some thoughts that came out of our meetings during this period and to focus on the strong sales that will occur in the coming years.

•Focus on ‘intellectual’ amenities in addition to the hard amenities. Build in programming for the mind and soul.

•Pay attention to ‘lifestyle’ brands in addition to hotel brands.

•In these times you have to ‘block and tackle’ – get back to fundamentals

•Concept of a ‘greater California’ meaning NV, AZ, OR, WA and ID.

•There may not be the appreciation in the coming years for vacation homes, so developers will need to focus more on the use aspects to make the property more valuable in that sense.

•Follow-on – service will become even more important to provide that side of value to the owner.

•Micro-economy – defined as an area with very limited supply of housing and therefore high demand.

•Bootstrapping Developer – ah, how often have we seen him?

•Tennis, after being dead in past years, grew 14% last year. Come back?

•Zip Code Brands i.e. the zip for an Aspen or Sun Valley. Remember Plumtv.com? Those areas.

•Best of all, from a selling vantage: QTR = Quality Time Remaining to have your vacation home and do all the things you want. This from Jim Hill at East-West.

Bottom line…the market is wide open for free-range fractions!